An emergency fund is your financial safety net, helping you handle unexpected expenses like medical emergencies, job loss, or urgent repairs without stress. But how much should you really save, and where should you keep this fund for easy access and safety?
Vizzve Finance explains everything you need to know about emergency funds.
How Much Emergency Fund Do You Need?
Basic Rule: Save 3 to 6 months’ worth of essential living expenses.
Consider Your Job Stability: If your income is unstable, aim for 6 to 12 months.
Include All Essential Costs: Rent/mortgage, utilities, groceries, loan EMIs, insurance, and healthcare.
Adjust for Family Size: More dependents usually mean a larger emergency fund.
Where to Keep Your Emergency Fund?
1. Savings Account
High liquidity and safety, but usually lower interest rates.
2. Liquid Mutual Funds
Slightly higher returns, with quick withdrawal options.
3. Fixed Deposits with Flexible Withdrawal
Good for slightly better interest, but ensure penalty-free premature withdrawal.
4. Money Market Accounts
Higher interest rates and easy access, suitable for emergency funds.
Tips to Build and Maintain Your Emergency Fund
Start small and increase contributions regularly.
Automate transfers to your emergency fund account.
Replenish the fund immediately after use.
Avoid using it for non-emergencies.
How Vizzve Finance Can Help You
Vizzve Finance offers financial planning tools and personal loan options to support you during emergencies while you rebuild your fund.
FAQs
Q1. Can I use my emergency fund for planned expenses?
No, it’s reserved strictly for unexpected financial emergencies.
Q2. How often should I review my emergency fund amount?
Review annually or after major life changes.
Q3. Is an emergency fund different from savings?
Yes, it’s a separate, easily accessible fund for urgent needs only.
Q4. Does Vizzve Finance offer accounts for emergency funds?
We provide tools to manage your finances and loans but recommend consulting your bank for suitable accounts.
Published on : 10th August
Published by : SMITA
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